PMS Bail-Out 'Softens' £4bn Cut-Backs

A House of Commons announcement on a 'bail-out' for NI savers has been welcomed as "a great relief".

The Presbyterian Church's former Moderator Dr Stafford Carson, who has been leading calls for compensation for those hit by the collapse of the crisis-hit Presbyterian Mutual Society, (PMS) was very pleased to hear that the coalition Government will provide £25m in cash and a £175m loan to compensate the savers involved.

The Chancellor George Osborne has announced the move in today's Spending Review.

It will see almost 10,000 investors who faced losing their savings after the PMS was placed into administration in November 2008 given most of their frozen money back.

Revealing the support plan during his announcement at Westminster, Mr Osborne said: "The collapse of the PMS has caused great hardship, and people have been left without their money for far too long.

"I can confirm today that we will provide the Northern Ireland Executive with £25m in cash and a £175m loan to help those who have lost their life savings."

However, the less welcome news will see Northern Ireland facing cutbacks of £4bn in real terms over four years - a "real test" for the NI Executive.

That according to the Stormont Finance Minister, Sammy Wilson who has warned that capital funds for roads, hospitals and public projects in NI will have to be cut by about 40% by 2014/15.

Mr Wilson said this was "worrying" and "very difficult decisions" would have to be taken.

Speaking after this afternoon's announcement, Mr Wilson said: "Whilst the level of budget reductions we are facing is unwelcome, and will present a serious challenge, it comes as no great surprise. The mechanics of the Barnett Formula mean that it was possible to predict such an outcome.

"On the current expenditure side the Northern Ireland Departmental Expenditure Limit (DEL) budget will fall by 8% in real terms by the end of the four year period. Given the inflation and pay pressures we face this is going to be difficult to manage. That is why I asked departments to produce savings plans early in our local Budget process - to give them time to prepare for the tighter financial environment from April next year.

"In terms of capital investment the situation is much more worrying.

"The Northern Ireland capital budget will fall by 40.1% in real terms by 2014-15.

"In addition, the biggest reduction will be in 2011-12 where our capital DEL will reduce by £342.7 million in real terms.

"We are going to have to take some very difficult decisions in terms of what projects to fund going forward - the reality is that we have much less money available than was envisaged under the Investment Strategy that was published as part of the previous budget," he said, noting that, by "working together, we can mitigate against the worst effects of the spending cuts".

However, 'working together' looks unlikely as the Sinn Fein Finance Spokesperson Mitchel McLaughlin said: "What we have heard today is what we have all been anticipating - punitive cuts in the Block grant coupled with significant and severe reductions for those in receipt of benefits, pensioners and low-income families.

"The projected cuts are savage - there is no other word to use. They signal only disastrous consequences for the economy in general and the most disadvantaged in particular.

"The outcome of what George Osborne announced today, if allowed to go unchallenged, will result in a minimum of 20,000 job losses in the public sector in the North and a similar number in the private sector," he fumed.

"The announcement also casts a question over Owen Patterson's assertion a week ago that the £18bn investment package which was agreed as part of the St Andrews Agreement is guaranteed," he said.

See: UK Spending Review Hits Hard

(BMcC/KMcA)